Planet Labs reports record top line thanks to rising defense spending in Europe

Planet Labs, a small-cap satellite imagery and data company, jumped 29% this morning, June 5. This comes after the company reported record revenue and its second consecutive quarter with a profit, versus Wall Street expectations for a loss. Planet Labs is being boosted by rising European defense spending as the U.S. pulls back from the continent.

Shares of Planet Labs were up nearly 29% at $5.12 per share this morning. They had not traded higher in a regular session since February 21. Yesterday, June 4, they closed up nearly 4% at $3.99 per share, which was tied for the best close with March 25 and May 28.

The company reported its results for the fiscal-2026 first quarter (ended April 30): Revenue rose 10% year over year to a record $66.3 million. For the second consecutive quarter, Planet Labs reported positive adjusted EBITDA, at $1.2 million in the February-April period. Meanwhile, Wall Street had expected it to be negative $3.0 million, notes Bloomberg. 

For the first time in its history, the company achieved positive free cash flow of $8 million, said Planet Labs President and CFO Ashley Johnson in the press release.

Planet Labs managed to beat analysts' expectations as European countries ramped up defense spending amid a pullback in U.S. security support, wrote Bloomberg.

Demand for satellite data in Europe is higher now than it was at the start of the full-scale war in Ukraine, Planet Labs CEO Will Marshall said in an interview with Bloomberg.

«With the changed dynamic with the U.S., they are trying to pick up more of that capability themselves and they’re trying to do that quickly,» Marshall said.

In the first quarter, Planet Labs received an eight-figure contract for its ocean surveillance solution from a European defense and intelligence client, the company said in the earnings announcement. It did not disclose the exact amount or the name of the client, however. It also reported an expansion of a seven-figure contract with the German government, as well as expanded cooperation with the Welsh government. 

The backlog exceeded $0.5 billion at the end of the quarter, indicating significant future growth potential, notes Guru Focus. In addition, the company guides for negative adjusted EBITDA both in the second quarter and in the full year. Guru Focus says this indicates «ongoing financial challenges.»

As of yesterday's close, Planet Labs is off 1.2% year to date but has still more than doubled (up 119%) in the last 12 months.

The stock has 10 «buy» ratings from Wall Street analysts versus just two «holds,» MarketWatch data shows. There are no sell recommendations. The average target price is $5.98 per share, implying upside of nearly 50% to the last closing price.